Alibaba move is bad news for Yahoo investors

The Alibaba announcement could have sparked a bigger selloff. But Yahoo is down just 1.4%.

BGC Partners Colin Gillis said that’s probably because much of the uncertainty surrounding Yahoo’s stake in the Chinese company appears to already be priced in — especially after last week’s news that talks between the two companies have collapsed.

But Gillis said Yahoo investors should definitely be worried.

Yahoo owns roughly 40% of Alibaba Group, which wants to buy the 27% stake in Alibaba.com that it doesn’t already own.

“If I were a Yahoo shareholder, I would continue to be nervous at Yahoo’s ability to extract value from this privately-held China-based asset,” he said in an interview.

With Alibaba.com’s status as a publicly-traded company in Hong Kong, Yahoo investors “had the benefit of filings and conference calls,” Gillis said, adding, “At least there were some disclosures.”

It’s widely known that Alibaba Group, led by Chief Executive Jack Ma, wants to buy back Yahoo’s stake.

In a statement, he said taking Alibaba.com private “will allow our company to make long-term decisions that are in the best interest of our customers and that are also free from the pressures that come from having a publicly listed company.”

Piper Jaffray’s Gene Munster said in an e-mail he sees the privatization move “as a sign that a Yahoo sale of Asian assets becomes less likely, but doesn’t change the fact that Jack Ma wants to reacquire the stake from Yahoo at some point.”

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